Security Bank Corporation (PSE: SECB) posted net income of PHP9.1 billion in 2023. Total revenues grew 8% year-on-year to PHP43.0 billion. Net interest income increased 19% to PHP34.7 billion. Net interest margin for the full year was 4.49%, higher compared to 4.23% in 2022. Total non-interest income was at PHP8.2 billion. Service charges, fees and commissions grew 15% to PHP6.1 billion, led by increase in fees from credit cards, remittances (which include Instapay fees) and bancassurance.  

Operating expense was 14% higher, driven by investments in manpower and technology. Cost-to-income ratio was 60.8%, higher than the 57.8% in 2022. 

Pre-provision operating profit was PHP16.9 billion, up +1% year-on-year. The Bank set aside PHP4.8 billion as provisions for credit and impairment losses in 2023, a 69% increase versus year-ago level of PHP2.8 billion given impacts from provisions releases in 2022 and elevated costs for credit cards in 2023. Gross non-performing loan ratio was 3.36% and NPL reserve cover was 82%. 

Return on shareholders’ equity was 6.95%. Return on assets was 1.06%.  

Quarterly Results: For the period October 1 to December 31, 2023, net income was PHP1.5 billion. Fourth quarter revenues increased to PHP11.8 billion, up 15% year-on-year and up 11% quarter-on-quarter. Driving Q4-2023 revenue growth was net interest income, which increased 38% year-on-year and 11% quarter-on-quarter to PHP10.0 billion. Net interest margin in Q4-2023 increased to 5.20%, up 128 basis points year-on-year and up 34 basis points quarter-on-quarter. Q4-2023 service charges, fees and commissions increased 29% year-on-year and 17% quarter-on-quarter to PHP1.8 billion. Pre-provision operating profit for the quarter was PHP4.6 billion, up 18% year-on-year and up 13% quarter-on-quarter. The Bank set aside PHP2.2 billion as provisions for credit and impairment losses in Q4-2023. 

Balance sheet remains strong 

CASA deposits increased 4% year-on-year and 7% quarter-on-quarter. CASA as percent of total deposits was at 60%, up from 58% a year ago. Total deposits were at PHP607 billion, up 8% quarter-on-quarter. 

Six new Security Bank branches were opened during the fourth quarter of 2023, bringing the Bank’s branch network to 325 branches as of December 31, 2023. The new branches are located in Hermosa (Bataan), Alaminos City (Pangasinan), CDO-Uptown (Cagayan de Oro City), Kidapawan City (North Cotabato), Cebu-Streetscape (Cebu City), and Iligan-Andres Bonifacio (Iligan City). 

Net loans increased to PHP538 billion, up 7% year-on-year and up 7% quarter-on-quarter. Retail and MSME loans combined accelerated to 29% growth rate year-on-year from the 16% growth posted in 2022. Wholesale loans were same as year-ago level. The growth in retail and MSME loans was driven by home loans which grew 18% year-on-year, credit cards which rose 44%, auto loans which grew 36%, and MSME loans which grew 77%. On a sequential quarter-on-quarter basis, retail and MSME loans combined increased 11% while wholesale loans grew 7%. Retail and MSME loans as percent of total loans increased to 29%, up from 24% a year ago. Total investment securities grew 20% year-on-year to PHP227 billion. 

The Bank maintains healthy liquidity, with Liquidity Coverage Ratio (LCR) at 158% and Net Stable Funding Ratio (NSFR) at 131% as of December 31, 2023. 

Security Bank continues to be among the country’s best capitalized private domestic universal banks. Common Equity Tier 1 Ratio was 15.3% and Total Capital Adequacy Ratio (CAR) was 16.2%. Total assets increased to PHP872 billion, up 3% year-on-year and up 7% quarter-on-quarter. Shareholders’ capital likewise increased to PHP136 billion, up 8% year-on-year and up 3% quarter-on-quarter. 

“The economy is adjusting to moderating levels of inflation and continued elevated interest rates. Our growth for 2023 in both loans and deposits was evident across our retail and SME segments. In turn, our wholesale teams successfully secured key mandates to support client growth initiatives. We will accelerate that growth in 2024 and continue to deliver on our Transformation goals.” — Security Bank President & CEO, Sanjiv Vohra.